Business Valuation Calculator
Small businesses are most often valued as a multiple of their yearly earnings. This calculator applies a multiple to your earnings and shows a range, as a starting point for a conversation with a broker or buyer.
Enter your figures below. Results update as you type.
Estimated value$600,000.00
- At 2.5x earnings
- $500,000.00
- At 3.5x earnings
- $700,000.00
- Earnings multiple alone
- $600,000.00
A multiple of earnings is a rough starting point. A real valuation also weighs growth, customer concentration, how much the business depends on the owner, and recent sales of similar businesses.
How the Business Valuation calculation works
Value = yearly earnings x multiple + assets included - debt assumed
A business with $200,000 of seller's discretionary earnings at a multiple of 3 is valued at $600,000, with a range of $500,000 to $700,000 at multiples of 2.5 and 3.5.
Frequently asked questions
How do you value a small business?
The usual method is a multiple of seller's discretionary earnings: profit plus the owner's salary and personal expenses run through the business. Multiples of 2 to 4 are typical for small owner-run firms.
What is the difference between SDE and EBITDA?
SDE adds the owner's pay back to profit and suits small businesses where the owner works in the business. EBITDA does not, and is used for larger companies run by paid managers.
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